Video game sales dropped 22 percent in December compared to the same time in 2011, closing out a tough year for the industry.

Total spending on new physical hardware, software and accessories topped $3.21 billion last month, down from $4.1 billion a year earlier, according to new data from the NPD Group. For the year overall, total game sales dropped 22 percent to $13.26 billion.

However, the NPD Group's industry analyst, Liam Callahan, said the video game market has grown in recent years. It makes sense to compare last month's results to December 2005, which was the last time the industry was transitioning between console generations with the launch of a new platform.

"As a testament to how much the retail market has grown, overall physical dollar sales in December 2012 are up 10 percent when compared to December 2005," he said.

New software sales saw the steepest decline during December, falling 26 percent from $2.07 billion in December 2011 to $1.54 billion last month. For the year, software sales dropped 23 percent to $6.71 billion. But much of the decline was simply that publishers released fewer games.

"A major culprit in the decline in retail sales in 2012 was the lack of new releases," Callahan said.

Meanwhile, hardware sales in December fell 20 percent to $1.07 billion, and accessory sales declined 14 percent to $603 million. Hardware sales were down 27 percent for the year overall, while accessory sales fell 8 percent.

Microsoft's Xbox 360 "dominated hardware sales" for the year, ranking as the best-selling device for 17 consecutive months. Consumers during the holidays were looking for deals when purchasing hardware. Sales of gaming bundles that included hardware and software grew 26 percent, while hardware selling alone with no games declined by 37 percent.

"Consumers are becoming more savvy and realizing they can get a lot more 'bang for their buck' with bundles typically offered for a limited time over the holidays," Callahan said.

NPD estimated that other physical format sales in December such as used and rentals totaled $217 million, while digital format sales brought in $765 million. This brought total consumer spend on games in December to more than $4.1 billion

About the Author

Angela has been a PCMag reporter since January 2012. Prior to joining the team, she worked as a reporter for SC Magazine, covering everything related to hackers and computer security. Angela has also written for The Northern Valley Suburbanite in New Jersey, The Dominion Post in West Virginia, and the Uniontown-Herald Standard in Pennsylvania. She ... See Full Bio

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